Oil rises on news of Nigerian oil rig attack

Oil prices slipped on Thursday after an upward blip on news that a Nigerian militant group attacked an oil installation, raising concerns about possible supply outages in Africa’s largest oil producer.

Light, sweet crude for July delivery was down 65 cents to $136.03 (Dh499) a barrel on the New York Mercantile Exchange by noon electronic trading in Europe. The contract on Wednesday rose $2.67 to settle at $136.68 a barrel.

A leader of the Movement for the Emancipation of the Niger Delta told The Associated Press that militant fighters travelled in boats through heavy seas to attack the Bonga oil field more than 65 miles (100 kilometers) from land. But they were not able to enter a computer control room that they had hoped to destroy.

A Royal Dutch Shell spokesman confirmed an attack, but gave no details. He said production had been stopped from the field, which normally produces about 200,000 barrels of crude per day.

The news added to concerns about the threat of a strike by Nigerian white-collar oil workers. Crude futures had climbed more than $2 a barrel on Wednesday on reports that Nigerian oil workers were about to strike after talks between US energy giant Chevron Corp and the country’s white-collar oil industry workers had broken down – although a later news report said the walkout had been averted.

Still traders appeared to more focused on the implications of a mixed weekly inventory report from the US Energy Department’s Energy Information Administration, which suggested stocks were in better shape than anticipated.

“There was a smaller-than-expected drop in crude supplies and a reasonably healthy rise in distillates,” said Mark Pervan, a senior commodity strategist at ANZ Bank in Melbourne, Australia.

The EIA report said crude oil supplies fell 1.2 million barrels last week, less than the 2 million barrel decline expected by analysts surveyed by energy research firm Platts, and inventories of distillates, which include heating oil and diesel fuel, rose 2.6 million barrels – more than expected.

Still, Vienna’s JBC Energy, in its daily report, said the US stock draw was significant when expressed in year-on-year terms, nothing that “crude oil stocks have fallen sharply by around 53 million barrels compared to end June 2007.”

Gasoline supplies fell 1.2 million barrels last week, where analysts were expecting an increase of nearly 1 million barrels. However, the EIA also said demand for gasoline is down 1.8 per cent, on average, over the last four weeks compared to last year.

Prices were also being restrained by expectations of production increases from Saudi Arabia, the world’s largest oil producer. The Saudis are planning a meeting of oil producing and consuming nations in Jeddah on Sunday to seek ways to tackle soaring oil prices.

Over the weekend, Saudi Arabia reportedly told UN Secretary-General Ban Ki-moon that it would increase oil output by 200,000 barrels a day, or by 2 per cent, from June to July. In May, the country raised production by 300,000 barrels a day.

“The market would be skewed towards seeing lower prices on the basis that Opec is trying to manufacture some announcement to cool the market,” Pervan said.

In other Nymex trading, gasoline futures were little changed at $3.4655 and heating oil was down by nearly 2 cents a gallon at $3.8415 a gallon. Natural gas futures rose nearly 9 pennies to $13.299 per 1,000 cubic feet.

In London, Brent crude futures slipped by 13 cents to $136.31 a barrel on the ICE Futures exchange.

 

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